Immigration as Political Theater

December 24, 2014. In a column that ran in the Chicago Tribune and more than a dozen other papers, Benjamin Powell, senior fellow of the Independent Institute and director of the Free Market Institute at Texas Tech University, argues that President Obama’s executive action on immigration will have only small, and generally positive, effects on the economic and fiscal climate.

Allowing illegal immigrants to work openly and legally allows them to use their skills in the jobs and industries where they can contribute the most value, rather than working off the books in occupations where black market employment is harder to detect. This alone, the Fiscal Policy Institute estimates, should boost the wages of those immigrants who qualify to work legally by 5 percent to 10 percent, which indicates that they are creating more valuable goods and services for the rest of us.

Mayor de Blasio Can Make Lasting Change with Nonprofit Living Wages and Career Opportunities

December 16, 2014. In recent years, there have been increased conversations at both the City and State level to address growing wage inequality through the provision of a living wage. However, one important segment of the workforce historically has been left out of these conversations– nonprofit employees. This op-ed by Jennifer Jones-Austin, CEO/Executive Director, Federation of Protestant Welfare Agencies and James Parrott, Deputy Director and Chief Economist, Fiscal Policy Institute describes how the Social Services Career Ladder project will address this wage inequality.

Wage Standards are Key to Reversing the Erosion of Wages and Living Standards in New York City

December 16, 2014. Despite considerable growth in the New York City economy over the past two decades, very little of that growth has trickled down to the average worker and his or her family, according to our new report. Wage standards like the minimum wage and the living wage are critical in ensuring that there is a floor under the job market and that workers are adequately paid. Prevailing wage standards, however, are a key means to ensure that skilled labor provides a path into the middle class.

Prevailing wage standards apply to occupation-specific subgroups within the skilled blue collar workforce. The prevailing wage level is established in the marketplace and reflects the pay and benefit standards that private employers have determined is appropriate to ensure a sufficient supply of trained workers.

This report focuses on the importance of establishing and maintaining prevailing wage standards for building service workers—janitors, security guards and building porters—as a practical way in which New York City government can promote greater economic opportunities and influence outcomes in the job market. The New York City building service workforce is made up largely of persons of color and recent immigrants. Local 32BJ of the Service Employees International Union (SEIU), which helped fund the FPI report, represents roughly 70,000 building service and security workers in the city, about half of all building service and security workers in the city.

Among the report’s key findings:

  • New York City’s real per capita GDP (that is, economic output per resident) grew nearly 60 percent from 1990 to 2012, yet inflation-adjusted median family income declined 15 percent, and median hourly wages dropped 10 percent;
  • Fully 95 percent of all income gains in the city over the past two decades went to the richest 10 percent of households, while almost half of city residents were left poor (i.e., living in poverty) or near-poor;
  • An increasing share of jobs leave a family in or near poverty. Among city residents in working families with children, 42 percent were at or below 200 percent of the federal poverty line in 2011, up considerably from 33 percent in 1990.

In addition to overall economic inequalities, disturbing economic disparities exist along racial and ethnic lines. The poverty rate is high at 14 percent for non-Hispanic whites, but it is starkly higher for blacks (23 percent), Latinos of any race (26 percent), and Asians (29 percent). Of all working poor families in the city, 87 percent are headed by a person of color, and working families headed by a person of color are more than twice as likely to be low-income as a working family headed by a white, non-Hispanic person.

The demographic profile of unionized building service workers is representative of the broader set of service contract and low-wage workers in New York City. The overwhelming majority (84 percent) are persons of color and 56 percent are immigrants. Nearly two-thirds live in low- and moderate-income neighborhoods, and another 30 percent reside in middle-income neighbor­hoods. However, the typical 32BJ member who is a trained security guard or building cleaner earns more than their neighbors, and their earnings contribute to family incomes that put these workers in the moderate- or middle-income range. With annual wage earnings of about $48,000, the typical 32BJ member’s earnings were above the average earnings for most workers in lower-income neighborhoods, making them a stabilizing force in many of the neighborhoods in which they live.

James Parrott, FPI’s Deputy Director and Chief Economist and the report’s principal author, said: “By flexing its service contract buying power and leveraging city actions and subsidies to aid real estate developments, the City of New York is in a strategic position to set standards for the wages of tens of thousands of low-wage workers and, in turn, to help shape compensation and employment practices in the broader low-wage labor market in New York City.”

“This report shows that prevailing wage standards are good for workers and good for New York City,” said 32BJ President Hector Figueroa. “Building service workers are overwhelmingly people of color and residents of lower-income communities. If we want to fight inequality, these standards are an important tool to end the “tale of two cities” and provide a path to the middle class for tens of thousands of working people.”

“Raising wage standards will ensure that more New Yorkers will be able to share in the prosperity that our robust and diverse economy generates,” said Ron Deutsch, FPI’s Interim Executive Director. “Further,” Deutsch noted, “it is an important concrete step toward addressing the deep economic and racial divides across New York City’s neighborhoods.”

Minimum wages, living wages and prevailing wages are complementary policies that are central to New York City’s economic well-being and growth and essential for its role as a city of opportunity. Elevating wage standards is key to raising living standards, reducing poverty, and improving opportunities for upward mobility.

Higher wages improve the city’s tax base, and, as more families are lifted out of poverty, will reduce government expenditures needed to care for the poor. There will also be important benefits for parenting and child development, as well as community involvement and civic engagement as families are more financially secure. No single policy will fix the city’s polarized economy, but establishing wage standards should be one of the most obvious first steps for an administration that takes the city’s history of economic polarization seriously.

PDF of Press Release

PDF of  Report

NY Economy Could Benefit from Obama’s New Immigration Order

December 14, 2014. Dan Janison, in a Newsday column, cites FPI’s estimate that the president’s executive order would be good for the New York economy.

The Fiscal Policy Institute estimates that out of a total 873,000 people who are undocumented in New York, 258,000 are “potentially eligible” for deferred action under Obama’s new executive order, unveiled last month.

….For his part, David Dyssegard Kallick of the Fiscal Policy Institute said of immigrants affected: “If they can act more freely in the economy, it is going to be good — not just for them personally.”

The Shale Tipping Point: The Relationship of Shale Drilling to Crime, Traffic Fatalities, Sexually Transmitted Diseases, and Rents in Pennsylvania, West Virginia, and Ohio

December 14, 2014. A report completed by a research team of the Multi-State Shale Research Collaborative found a clear relationship between the density of shale well drilling activity and increases in crime, rents, traffic fatalities and sexually transmitted diseases (STDs). These key “quality of life” issues had been identified in prior work by the Collaborative and in the work of others as having a potential relationship with intensive extractive industry “booms.”

To examine this relationship, the Pennsylvania research team divided the counties in Pennsylvania, Ohio, and West Virginia into three levels of drilling activity—low, moderate and high—to better understand the relationship between the density of drilling and the severity of impacts, and used non-drilling rural and non-drilling urban counties as control groups. The resulting research and analysis produced the following findings:

  • Employment: Drilling has had only a limited impact on employment in the three states, particularly when measured as a share of total employment. The bulk of the employment gains were in the six high-drilling counties and those were modest. Total growth in mining and natural resources employment in the three states from 2005 to 2012 was just over 25,000 jobs, or 22/100ths of one percent of all employment.
  • Population: No evidence was found of significant population growth in any of the states resulting from drilling.
  • Crime: Violent crime increased 17.7% and property crime 10.8% in the six high-drilling counties, compared to no statistically significant increases in medium- and low-drilling counties.
  • Traffic fatalities: Between 2005 and 2012, traffic fatalities involving trucks in the six high-drilling counties increased by a statistically significant 27.8%, compared to 2000 to 2005.
  • Sexually Transmitted Diseases (STDs): Since 2005, rates of chlamydia infection across all the drilling counties increased 24% to 27%, compared to non-drilling counties.
  • Housing: Rents in the regions with high-drilling counties all increased from 2005 to 2012 with the biggest increases in median (10.2%) and high-end (12.3%) rents.

In human terms, in the high-drilling countries, about 130 more violent crimes, 819 more property crimes and 160 more cases of chlamydia occurred each year by 2012 compared to 2005 (i.e., before the increase in drilling). Residents, most of whom gain no benefit from the gas industry, also bear the risk of higher fatalities from traffic accidents involving trucks and of higher rents. Local governments must pay for additional first responders and staff to address rising crime, traffic fatalities, and STDs.

This analysis offers clear evidence that a high concentration of drilling over a relatively short period of time is a recipe for significant, multiple impacts. Trends that are apparent in Pennsylvania are absent in West Virginia, perhaps as a result of slower and less concentrated drilling development, and are hinted at in Ohio, where drilling accelerated in 2012, the final year of our analysis. Local and state governments may be able to avoid or mitigate the most severe impacts by better controlling the pace of drilling, perhaps with county rig limits, or longer and more thorough permit and water review processes. States should enact severance taxes to help ensure that the industry, not taxpayers, foots the bill for impacts.

The analysis looked at crime, traffic fatalities, sexually transmitted diseases and housing, and found evidence of impacts in each area in high-drilling communities. The research relied, of necessity, on county-level (and, in the case of housing, multi-county) data, although the impact of drilling is often localized within counties. As a result of this mismatch between the geography of drilling’s impact and the data sources, the impacts on crime, traffic fatalities, STDs, and rents are likely to be underestimated. New case studies of the impact of shale gas drilling in Carroll County, Ohio; Greene and Tioga counties in Pennsylvania; and Wetzel County, West Virginia, provide numerous cautionary tales for New York as it considered whether or not to allow Horizontal Drilling and High-Volume Hydraulic Fracturing in the Marcellus Shale and Other Low-Permeability Gas Reservoirs.

This report built upon the prior research of Multi-State Shale Research Collaborative which included detailed case studies of four counties in Ohio, Pennsylvania and West Virginia and an extensive report Exaggerating the Employment Impacts of Shale Drilling: How and Why that documented the ways in which the oil and gas industries and their supporters have exaggerated the employment impacts (both actual and potential) of shale drilling. It also exposed the motivations for these exaggeration strategies: to preclude, or at least to minimize, taxation, regulation, and even careful examination of shale drilling.

The Fiscal Policy Institute is a member of the collaborative along with Policy Matters Ohio, the Keystone Research Center, the Pennsylvania Budget and Policy Center, The Commonwealth Institute for Fiscal Analysis (in Virginia), and the West Virginia Center for Budget and Policy.

PDF of the Full Report

PDF of an Abridged Version

PDF of the Technical Appendix

PDF of the Press Release

42% of NYC residents don’t have enough income to cover the basic necessities of a Self-Sufficiency budget, according to a new report.

December 2, 2014. According to the new 2014 edition of the Self-Sufficiency Standard for NYC, released today by the Women’s Center for Education and Career Advancement at a forum at the New School, the cost of a basic family budget in New York City has increased by 45% since 2000 while the median earnings of adults increased by only 17% over the past 14 years. The report, Overlooked and Undercounted: the Struggle to Make Ends Meet in New York City, is an update and extension of earlier basic budget reports prepared in 2000, 2005 and 2010. A report of the key findings and recommendations is also available.

The Self-Sufficiency Standard reflects the cost of basic necessities—housing, food, clothing, child care, health care, transportation, and taxes—without any “frills” like eating out or vacations. The standard varies by neighborhood of residence within NYC because housing is such a large part of a family’s budget, and it differs depending on family composition and the age of children. The standard represents the amount of income a family needs to pay for necessities without reliance on public or private subsidies. It is much higher than the federal poverty line but is far from what could be considered a “middle class” standard of living, for example, it does not include any allowance for college or retirement savings, or saving to buy a home. Saving for college is critical to upward mobility and buying a home is the main way most families build assets.

The full report includes a datafile of tables providing borough specific information for 152 family types. Budget standards are compiled for 7 geographic areas within New York City: Bronx, Queens, Staten Island, North and South Manhattan (96th Street is the dividing line), and Northwest Brooklyn (neighborhoods directly north and west of Prospect Park) and the rest of Brooklyn. South Manhattan and Northwest Brooklyn are separated out because housing costs are so much higher in those areas than in the rest of the city.

To take one example for a 4-person family with two adults, a preschooler and a school-age child, the Self-Sufficiency Standard budget ranges from $70,319 in the Bronx, to $98,836 in South Manhattan. The budgets for Brooklyn other than Northwest Brooklyn, Staten Island, North Manhattan, and Queens are within a fairly narrow range from $73,000-$76,000. Northwest Brooklyn’s budget for this family type would be a little over $79,000.

Among the report’s key findings:

  • 940,000 NYC households, representing 2.7 million people, lack enough income to cover basic necessities such as food, shelter, health care, and child care.
  • With over half (56%) of all households below the Standard, the Bronx has the highest overall income inadequacy rate in the city. Not far behind is Brooklyn (excluding Northwest) (49%), followed by North Manhattan (45%), and Queens (43%).
  • 83% of the households below the Standard in NYC have one or more workers.
  • While 80% of the people without a high school diploma are living below the Standard, education is not a guarantee—21% of all people with a 4-year college degree still have inadequate wages.
  • 25% of NYC households with incomes below the Standard are married-couple households, 23% are single-women households with children, and 5% are single-men households with children; 47% are households without children.
  • Households with children are at a greater risk of not meeting their basic needs. 59% of families with children have incomes below the adequacy level, and if there is a child under six, 65% have incomes below the Standard.
  • 79% of single mothers lack adequate income, and 68% of single fathers have inadequate incomes.
  • All race-ethnic groups are significantly affected: 36% of households with inadequate incomes are Latino, 25% are Black, 22% are White, 16% are Asian/Pacific Islander, and 1% are Other Race (including Native Americans.)
  • U.S. citizens head 71% of households below Self-Sufficiency and non-citizens head 29% of households with sufficiency income.
  • Reflecting race and/or gender inequities, women and/or people of color must have several more years of education than white males in order to achieve the same level of income adequacy.
  • The 5 occupations with the greatest number of workers whose incomes put them below the Self-Sufficiency Standard are, in numerical order, home health aides (60,000), janitors and building cleaners (29,000), childcare workers (27,000), cashiers (23,000), and maids and house cleaners (22,000).

An advisory committee identified three primary recommendations:

1)     Wages should be increased to align and keep pace with the costs of living by raising the minimum wage and broadening the coverage of the City’s living wage requirements to include the large social service workforce employed under City service contracts (higher wages should be coupled with better career advancement supports);

2)     Access to better employment requires investment by business, government and philanthropy in career ladders, pathways and apprenticeships with consistent, systematic, and large-scale opportunities for individual growth and advancement across sectors and industries;

3)     Policy solutions also need to address the cost of living side by making quality, affordable housing, food, and child care accessible to all New Yorkers.

The report notes that while a minimum wage increase to $13.13 an hour (which could be achieved with a $10.10 NYS minimum wage plus local authority to allow NYC to set a minimum wage 30% higher) or a $15 an hour wage floor for social service works on City contracts represent considerable progress, these critical wage floors should not be construed as ceilings.  These wage levels would provide a worker with annual earnings around $25,000-$30,000. Neither wage constitutes a self-sufficiency wage for a substantial portion of the 780,000 working households below the Self-Sufficiency Standard.  But they would put many thousands on a more certain path to attain self-sufficiency.

A similar report for Washington State figured prominently in the Seattle campaign that led to the enactment of a $15 an hour minimum wage.

*    *    *

The report was authored by Dr. Diana M. Pearce and produced by the Center for Women’s Welfare at the University of Washington.  Funding to support the report was provided by the United Way of New York City, The New York Community Trust, and City Harvest.

FPI’s Deputy Director and Chief Economist James Parrott served on the project’s Steering Committee.

Immigrant Numbers Have Leveled Off

December 1, 2014. In a finding with important implications for President Obama’s executive order on immigration, the Philadelphia Inquirer reports on a Pew Center study showing that the level of unauthorized immigration has been flat since 2009.

David Dyssegaard Kallick, director of immigration research for the Fiscal Policy Institute, a New York nonprofit that examines the role of immigrants in New York state and beyond, said: “It adds up to what I think is now established as a pretty clear trend, if you can call a flat line a trend.”


Thanksgiving – An American Holiday that Holds Special Significance for Every Proud Immigrant

November 24, 2014. An opinion piece in Sys-Con Media explains why immigrants give special thanks around Thanksgiving:

With our personal calendars filled with holidays that range from religious observances to children’s birthdays there is only one day of the year that we can all sit down together as one large, diverse family of Americans and celebrate who we are, where we came from and why this remains an extraordinary country of opportunity. Welcome Thanksgiving.

…This author came to the United States from Iran in 1969. I had no grand plan. Rather, I only had the promise of a job in the emerging information technology field with a young family to support. But I knew, like every hopeful immigrant around the globe knows, that only in America can success be achieved through hard work, since, regardless of all our societal problems, it is our work ethic that remains the most important criteria by which we judge our fellow citizens.

When these new American citizens sit down for their holiday meal this week, the odds are they personally locked up their businesses and shops to observe the day. The Fiscal Policy Institute (FPI) reports that foreign-born individuals start their own businesses across the nation at more than twice the rate of those born here (with the Greek community holding the top honors in their analysis of which immigrant group is most likely to open a small business). In New York, our nation’s most famed melting pot, the last census data available reveals that some 48% of the city’s entrepreneurs were foreign-born.

(This piece overstates our data a little. FPI data shows that immigrants make up 18 percent of small business owners in the United States and 16 percent of the labor force. So, immigrants are indeed more likely to be small business owners…but, not twice as likely.)

President’s Immigration Action Expected to Benefit Economy

November 21, 2014. In response to President Obama’s announcement that he will use the power of the executive office to shield about 5 million people from deportation and give them authorization to work, the Fiscal Policy Institute has prepared answers to the following questions.

What are the economic implications of administrative relief?

The Fiscal Policy Institute expects a 5 to 10 percent increase in wages for the roughly 5 million workers expected to be eligible for legal work status. A number of studies have looked at the economic benefits of gaining full legal status. In 2013, the Fiscal Policy Institute did a meta-study of these analyses, and found that they converged around the conclusion that the wage gain is about 10 percent.

David Dyssegaard Kallick, director of the Fiscal Policy Institute’s Immigration Research Initiative, explains the reason for the wage gain: “Administrative relief should help currently unauthorized immigrants to find a better job match, and they will be less likely to be taken advantage of by employers.”

“We’re talking about immigrants who are already here, so the issue is not new workers competing with existing ones,” adds Jared Bernstein, senior fellow of the Center on Budget and Policy Priorities. “In fact, bringing these workers out of the shadows will not only boost their wages, it could also bring some improvement for other workers. After all, if you find yourself working next to a group of workers who can be taken advantage of by your employer, that’s bad for them but it’s bad for you, too.”

What about the impact on taxes and spending?

The net fiscal implications are expected to be clearly positive.

Immigrants who gain this status will be paying taxes, and they will pay them on somewhat higher earnings than they have today. This will not change eligibility for programs such as SNAP (Food Stamps) or Temporary Assistance for Needy Families, and the newly registered immigrants are specifically excluded from subsidies in the Affordable Care Act.

State and local tax revenues would increase as a result of administrative relief. The Institute on Taxation and Economic Policy (ITEP) modeled a closely related question in 2013, and provides a state-by-state breakdown. Tax revenues would go up for two reasons. First, immigrants would be paying taxes on higher wages (see above). And second, they would be brought into full compliance in paying taxes.

The ITEP analysis considered a scenario in which all of the estimated 11 million unauthorized immigrants were given legal status. Administrative reform would be available to a little less than half that number, and wage gains would also be lower, so we estimate the gains in state and local tax revenues to be correspondingly lower. How much less? About a third to a half the size, at a first very rough approximation. The main reason is that administrative relief is expected to cover fewer people.

Looking at the cumulative gain in state and local taxes in all 50 states, Matt Gardner, executive director of the Institute on Taxation and Economic Policy, concludes: “President Obama’s executive action could raise nearly a billion dollars a year in new state and local tax revenue—and our research suggests that if Congress were to enact a more comprehensive approach to legalizing undocumented families, the states could bring in twice that amount.”

In New York State, for example, the net gain due to administrative relief would be about $100 million in added state and local revenues per year.

What about federal taxes and spending?

Even before this action, roughly half of unauthorized immigrants had payroll taxes withheld (which account for the biggest tax payment for all low-wage workers), and about the same share filed income tax returns. Immigrants granted administrative relief would be brought into full compliance on both payroll and income taxes.

The Council of Economic Advisors put out a report today that estimates that the federal deficit would be reduced by $25 billion over the next 10 years as a result of the administrative relief.

Is this the immigration reform we’ve been waiting for?

This is a major step forward. But, it is not a full immigration reform. It leaves an estimated 6 million unauthorized immigrants in the shadows. It does not address a system for workplace IDs. And, it does not address the question of future flows of legal immigrants. To implement a full immigration reform, as envisioned for example in the Senate bill passed in 2013, requires either that the House of Representatives vote on S.744, or that both houses pass a new immigration reform bill.

“It’s a very good moment for the president to be doing this,” Kallick adds. “There has been comparatively little unauthorized immigration in recent years. The next obvious step is for Congress to pass a bill that will not just be a stopgap measure but will address this problem permanently.”

PDF Version

Experts Face Off on Economic Impact of President’s Immigration Plan

November 21, 2014. Fox Business News reports on the economic impacts of the president’s immigration action, quoting the Fiscal Policy Institute:

On economic impact:

At the liberal-leaning Economic Policy Institute , Director of Immigration Law and Policy Research Daniel Costa argued that the plan would actually be good for low-wage U.S. workers and small businesses.

“Businesses should like it. Those who are paying minimum wage won’t have to compete with those paying less than minimum wage, or who are not paying overtime to unauthorized workers,” Costa said.

The Fiscal Policy Institute’s Immigration Research Initiative Director David Kallick agrees.

“It means that it can be harder for employers to pay [immigrants] lower wages and take advantage. It’s good for them but also good for U.S. workers who are standing next to them,” he said.

And, on fiscal impact:

While Kallick said the plan “can only have positive impacts on the economy,” he said it is difficult to assess what temporary relief could mean in terms of tax collection and for the deficit.

“The [Congressional Budget Office] estimated there would be a $158 billion decrease in the deficit for comprehensive reform,” Kallick said. “If Congress would pass full reform, this is the level of impact we’d see. This is significantly less than that.”

However, Kallick gave a ballpark figure, estimating that on the state and local level, authorizing these immigrants would mean an additional $1 billion in taxes.

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